3: It is possible to make a cheap 40mpg shitbox that nobody wants to drive. It's called the FIAT 500. If you've never driven a car in Europe, they're small, slow, and just not suited for the American market. It's been tried, and has failed every time.

To put this out there, the little Fiat 500 doesn't get 40mpg. Rated at 32 or 34 with an auto on the highway, and 38 with a manual. Ford/GM have better econobox ratings (Cruze, Focus) and they're double the car.

Some more information as I dive through this stuff today (wow, work related even), US NOx limits (tier 2 bin 5) are significantly lower than Euro V/VI, while we allow a higher CO limit than their regs.